Making History: Six Strategic Trials

8 Julia Schiller WASHINGTON, DC Partner +1 202 383 5412 jschiller@omm.com Abby F. Rudzin NEW YORK Partner +1 212 326 2033 arudzin@omm.com Jonathan Hacker WASHINGTON, DC Partner +1 202 383 5285 jhacker@omm.com The DOJ claimed that the merger between Penguin Random House and Simon & Schuster would substantially lessen competition for authors of anticipated top-selling books. On October 31, 2022, after a threeweek trial, the district court found for the government and enjoined the merger. While the merger would have increased the combined publishers’ market share, the DOJ could not prove any lessening of competition in the downstream distribution markets. Instead, the DOJ claimed that the merger would result in less competition in the upstream book acquisition market in the form of lower advances paid to authors of “anticipated top selling books.” The $2.175 billion merger turned on the validity of that alleged monopsony market. Claims Trial and Outcome What Was at Stake Why It Matters DOJ’s complaint was premised on a monopsony theory of harm, uncommon in the merger context. By focusing on buyer power—publishers’ acquisition of the rights to authors’ works— rather than seller power, the government shifted away from the traditional consumer welfare standard.

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